Living Cities to award $14.75 million to Cleveland to boost redevelopment effort masterminded by Cleveland Foundation

Living Cities
, a consortium of the world's 22 largest foundations and banks, is set to announce today in Detroit that Cleveland is one of five U.S. metropolitan areas to share an $80 million basket of grants and loans. Cleveland and the other winners -- Detroit; Baltimore; Newark, N.J.; and Minneapolis-St. Paul, Minn. -- were selected from 23 competing cities.

In all, $14.75 million will flow to Cleveland over the next three years. More important than the money, say those involved, is the stamp of approval from Living Cities, whose members include the Ford, Rockefeller and Bill and Melinda Gates foundations.

"We're really excited. It's a tremendous validation," said
Ronn Richard
, president and chief executive of the Cleveland Foundation, which led the application and initiated the programs that will be expanded by the award.

Over the past five years, the Cleveland Foundation used its influence to enable discussions for the first time among the Cleveland Clinic, University Hospitals and Case Western Reserve University about how they could pool their collective buying power. The foundation also led the effort to create new worker-owned cooperative companies based on the promise of such spending.

So far, two companies --
Evergreen Cooperative Laundry
and Ohio Cooperative Solar -- are up and running and employing 52 workers. Another, Green City Growers, is set to launch soon on 10 acres east of East 55th Street at Grand Avenue.

The cash and loans from Living Cities will enable the foundation and its local partners to create eight or nine more worker-owned cooperatives by 2013. The companies could, for example, clean and maintain medical equipment, or assemble sterile kits of materials for use in hospitals.

By diverting a portion of their income into stock-purchase plans, employees will be each able to amass $65,000 in equity in the companies after seven or eight years.

There's more: Much of the new investment will be focused on Cleveland's
Health-Tech Corridor
, a four-mile swath of land from Cleveland State University to University Circle, where the Regional Transit Authority's new bus rapid transit line on Euclid Avenue functions as a spine.

View full size
Geis Construction
A rendering of the MidTown Tech Park, a $21 million project planned on Euclid Avenue in Cleveland. The Cleveland Foundation and partners hope new funding from Living Cities enable the creation of more incubators like this one in the near future in the city's Health-Tech Corridor.

The Cleveland Foundation, plus its partner institutions and the city of Cleveland, want to recruit to the corridor three or four new businesses, using incentives enabled by the Living Cities initiative to bring additional jobs to the city and to magnify the collective buying power of the Clinic, UH and CWRU.

The foundation estimates that the new cooperatives and the new businesses in the Health-Tech Corridor will create 800 new jobs over the next three years. They're hoping to create thousands more jobs after that, and to export the economic-development model to Youngstown.

Another goal is to create a commercial land trust, which will assemble and hold key pieces of land to ensure they're developed in accordance with the goals of the Living Cities investments and not left to the whims of the market.

The foundation's proposal unites inspirations from the University of Pennsylvania, which transformed West Philadelphia by investing heavily in the neighborhood, and from Mondragon, Spain, where worker-owned cooperatives have dramatically increased household wealth in a formerly poor corner of the Basque region.

The "Cleveland Model," as it's called, is attracting national attention.

"It's huge," said Ben Hecht, president and chief executive officer of Living Cities. "People from the 22 organizations that make up Living Cities think it's one of the more compelling ideas in the country."

Behind the foundation's effort -- and the Living Cities award -- is a recognition on the part of all involved that federal programs over the past half-century have failed to put a dent in urban poverty.

"We're definitely trying to come up with new models to re-engineer cities to be places of opportunity for low-income people," Hecht said. "Most of the approaches that we have are obsolete, whether it's local, state or federal."

Living Cities endorsed the Cleveland proposal because, Hecht said, it represents a new take on how it's in the interest of "anchor" institutions such as universities and medical centers to improve their surroundings.

After the University of Pennsylvania revamped
West Philadelphia
in the 1990s, other universities, including Yale, Johns Hopkins, Notre Dame and Ohio State, followed suit. In Cleveland, CWRU collaborated with University Circle Inc. to create a Penn-style development at Uptown, where 102 apartments are under construction at the intersection of Euclid Avenue and Mayfield Road.

The Cleveland Foundation supported Uptown, but wanted to expand the Penn approach to involve multiple institutions. Starting in 2005, it persuaded the Clinic, UH, CWRU and other institutions to become part of what it dubbed "Greater University Circle."

Steven Standley
, Senior Vice President of System Services at UH, gave the foundation credit for breaking the ice in a town where the big medical centers didn't have a history of collaborating on nonmedical business issues.

"We couldn't call each other up, at least we didn't think we should," Standley said.

Oliver "Pudge" Henkel Jr.
, chief government relations officer for the Clinic, said that "it wasn't obvious at all" at the outset of the foundation's initiative that the big institutions should be working closely together on efforts to uplift surrounding neighborhoods.

But the big nonprofits came around. In quarterly meetings, the Greater University Circle organizations agreed for the first time to share master plans and coordinate efforts to improve transit infrastructure and roads in the areas.

Inspired by Mondragon, the foundation persuaded its partners to compile and share information about how much they were spending annually to do everything from washing sheets and towels to buying produce. The grand total: $3 billion.

With commitments to spend a growing portion of that amount every year locally, and to buy from the new worker-owned co-ops, the foundation launched the first Evergreen ventures and demonstrated the power of buying locally.

Richard and others involved say the city of Cleveland played a critical early role by tapping $12.25 million in federal grants to launch the Evergreen start-ups at a time when local banks declined to provide seed money.

"Our administration is really working with our institutions, foundation and local businesses," said Tracey Nichols, economic development director under Cleveland Mayor Frank Jackson.

Standley said the Cleveland "anchor" institutions are committed long-term to the initiative started by the Cleveland Foundation.

"This isn't a 'do-the-right-thing' charity thing," he said. "We see this more as an economic-development initiative. If everything stabilizes and the city grows, it's better for all of us."